Per K.D. Mankar : In all these are four appeals from the appellants, who are a 100% E.O.U. The dispute relates to duty liability in respect of Rejects and Waste of grey fabrics and twisted yarn cleared by the appellants from their E.O.U. to the domestic tariff area (D.T.A.). In the show cause notices following two common grounds are raised:-

(a) There was no valid permission for D.T.A. sale and

(b) After 01.04.1999, the Exim Policy prescribed D.T.A. entitlement based on F.O.B. value of export i.e. physical export only and not deemed exports.

1.1 The Commissioner of Central Excise confirmed the demands raised in each of the four show cause notices and imposed equal amounts of penalties in each case as indicated hereunder:

2. The appellants attack against the findings recorded by the adjudicating authority is on two main grounds:

(i) The words "50% F.O.B. value of exports" would also include deemed export under para 9.9 of the policy.

(ii) In case of Rejects, Waste etc., no D.T.A. permission is required.

3. We have heard both sides.

4. On perusing the contents of the impugned order, we note that, the appellants have made a claim for duty concession in terms of Notification No. 20/98-CE dt. 18.07.1998. We note that, the said claim was rejected on the ground that, the said exemption can be extended only in the event the finished goods were manufactured from indigenous raw materials. It was held that, since the raw materials were received from the other 100% EOU, these are deemed to be imported materials. As far as this objection is concerned, we note that, it is totally contrary to the law EOUs being domestic units the products made therein are obviously indigenous. Case laws in the case of (i) Vikram Ispat, reported in 2000 (40) RLT 205 (CEGAT-LB)=2000 (120) ELT 800 (Tri.-LB) (ii) CCE, Jaipur Vs. Maiden Trading Co. Pvt. Ltd. reported in 2001 (45) RLT 267 (CEGAT-Del.)=2001 (132) ELT 431 (Tri.-Del.). Accordingly we hold that the appellants are entitled to the said exemptions in the absence of any other ineligibility having been established.

5. We note that the adjudicating authority has focussed his findings on the third proviso to Notification No. 2/95-CE, which specifically requires that Assistant/Deputy Commissioner is required to be satisfied that total value of clearance for home consumption does not exceed 50% of the F.O.B. value of exports made in the financial year. The said proviso also requires the AC/DC to satisfy as to whether the unit has fulfilled the minimum Net Foreign Exchange Earnings as a percentage of exports (NFEP) prescribed in Appendix I of the said policy. The adjudicating authority also has mentioned that, in terms of amendment made to the Exim Policy with effect from 01.04.1999 the Development Commissioner was under legal obligation to permit the D.T.A. sales with reference to 50% of the value physical exports and not with reference to value including deemed exports.

5.1 In this connection, we would like to reproduce the relevant provision.

"Provided also that the exemption under this notification shall not be availed until the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the said goods, including software, rejects, scrap, waste or remnants,-

(a) bei